Consumerism
Awareness of one's role as a consumer in markets. This centers around the information and capabilities required to make reasonable purchasing decisions.Advertising Approaches | Affordability |
Branding | Consumer Behavior |
Consumer Protection | Consumer Rights |
Ethical Consumerism | Marketing & Sales Tactics |
Negotiation | Personal Needs |
Pricing | Quality |
Service Terms & Conditions | Value |
Credit
Knowledge of credit products and their total costs. Centers around the distinction between the productive and cost effective use of credit and problematic credit that is expensive, unproductive or unaffordable. For example, an affordable mortgage that allows a family to pay for a home as they use it as compared to impulse purchases funded with high interest credit.Compound Interest | Credit Cards |
Credit Reporting / Credit Scores | Fixed / Variable Interest Rates |
Fixed Payment Term Loans | High-interest Credit |
Line of Credit | Mortgages |
Overdraft | Penalties |
Secured Loans/ Unsecured Loans | Terms & Conditions |
Budgets & Expenses
The capacity to budget for monthly, annual and irregular expenses.Budgets | Cash Flow |
Income | Payment Scheduling |
Personal Expenses | Recurring Expenses |
Savings | Taxes |
Unexpected Expenses |
Home Economics
Home economics looks at the needs of a household or individual and how these needs can be met within a budget. This often looks at doing things in the most economical way that is conductive to quality of life. For example, comparing the cost and nutrition of home cooked meals with convenience foods.Clothing | Education |
Energy | Entertainment |
Food | Healthcare |
Housing | Insurance |
Maintenance & Repair | Nutrition |
Taxes | Transportation |
Financial Planning
Modeling future financial needs including life changes such as retirement and planning to meet these needs. This typically includes the concept of efficient market theory that predicts it is difficult for an individual to outperform market averages on a risk-adjusted basis.Bonds | ETFs |
Efficient Market Theory | Expense Ratios |
Financial Needs | Government-insured Accounts / Investments |
Historical Performance of Investments | Investing |
Investing Risk | Mutual Funds |
Passive Investments | Retirement |
Risk/Reward | Saving |
Stocks |
Financial System
A basic working understanding of the global financial system including the following foundational concepts.Capital | Capitalism |
Competition | Debt |
Income | Inflation |
Interest | Labor |
Markets | Money |
Pricing | Recessions |
Savings | Wealth |
Small Business
As many individuals will run a business or work for a small business, foundational business economics is an element of financial literacy. This may include awareness of the competitiveness of industries and the high rate of new small businesses that fail.Business Expenses | Business Failure |
Business Financing | Business Model |
Business Risk | Business Structure |
Business Taxation | Net Income |
Return on Investment | Revenue |
| Overview: Financial Literacy | ||
Type | ||
Definition | The foundational knowledge and know-how required to make informed financial decisions and plans. | |
Related Concepts | ||
